Negligence of Real Estate Agents

Real estate agents are professional sellers and are required to make accurate disclosures pertaining to the property that they sell, among other duties that they owe. A seller's misrepresentation or negligent action is a serious issue. There may be several different avenues of relief, including a lawsuit for negligence or for violations of the New Jersey Consumer Fraud Act. Each case is different, and it is important to retain an experienced Bergen County real estate lawyer when trying to obtain remedies for the negligence of real estate agents.

N.J.A.C. 11:5-6.4(b) requires licensed real estate agents to make reasonable efforts to determine all of the material information related to a piece of real property's physical condition if the agent has accepted agency or has been retained to market the property as a transaction broker. The agent may need to consider information about psychological impairments and social conditions as aspects of the physical condition of the property. Psychological impairments are things such as a property supposedly being haunted or a murder or suicide happening on the property. If a prospective buyer or tenant asks whether there are psychological impairments, licensed real estate agents are required to give any information that they have about the psychological impairments that could affect the property.

Real estate agents also owe a duty to disclose information about the property's physical condition that they actually know, as well as what their reasonable efforts would have revealed about the physical condition. The disclosure is supposed to be made to their client or principal, as well as other parties to a deal when appropriate. Real estate agents owe a duty to make reasonable efforts to determine all material information by asking the seller about physical conditions that might affect the real property and doing a visual inspection to decide whether there are any easily observed physical conditions that affect it.

Material information is any information to which somebody who is reasonable would assign importance when determining whether and how to go forward with the deal. It also includes information that the licensed real estate agent knows or has reason to know that the person receiving the information would likely consider significant in determining whether to proceed, even if a reasonable person would not see it that way.

For example, when an elevator had a history of dangerously defective operation that had killed two children, the court found that brokers were under a duty to disclose that information when specifically asked. The brokers’ attorneys argued that the defective system and deaths presented only a psychological impairment, but the appellate court disagreed and found that the history of the elevator's defective operation was information about the property's physical condition that would be material to a reasonable person, regardless of whether it was repaired. Additionally, in that case, the plaintiffs had asked specific questions about the safety of the elevator, which necessitated an honest answer.

The defendants argued that they had no duty, and there also was no actual knowledge of the earlier accident before closing. However, the appellate court held that the broker defendants owed a duty to disclose the history of the defective elevator, so the plaintiffs had appropriately stated a cause of action for negligence. Had one of the plaintiff's children been injured as a result of the defective elevator, a personal injury lawsuit could have been pursued as well.

In addition to a claim based on negligence, it may be possible to bring a claim under the Consumer Fraud Act, depending on the particular circumstances. To establish a claim, you would need to show unlawful conduct by the real estate agent, an ascertainable loss, and a causal connection between the illegal actions and the ascertainable loss. Unlawful conduct could include any unconscionable commercial practice, false promise, false pretense, misrepresentation, or the suppression, omission, or concealment of a material fact, intending the reliance of others. Powerful remedies may be available under the New Jersey Consumer Fraud Act, potentially including treble damages.

Our legal team at Leopold Law may be able to help you recover damages for the negligence of real estate agents in Bergen County. Attorney Howard Leopold also handles cases in Passaic, Hudson, and Essex Counties and represents people throughout Northern New Jersey. Call Leopold Law at (201) 345-5907 or contact us via our online form to set up a free consultation. We also can assist you in collections disputes, family law proceedings, or other forms of civil litigation.